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GLOBAL BUSINESS ENVIRONMENT.
Term Paper ID:26473
Essay Subject:
Examines globalization & its benefits, management functions, cycle time reduction, loops, procurement, examples (Xerox, AMSTAN), reengineering, mass customization, international standards (ISO 9000), more.... More...
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Paper Abstract:
Examines globalization & its benefits, management functions, cycle time reduction, loops, procurement, examples (Xerox, AMSTAN), reengineering, mass customization, international standards (ISO 9000), more.
Paper Introduction:
CHALLENGES TO PROCUREMENT MANAGEMENT IN AN ORGANIZATION OPERATING IN A GLOBAL ECONOMIC ENVIRONMENT
TABLE OF CONTENTS
Page Number
Chapter
1 - INTRODUCTION .............................. 1
2 - THE GLOBAL ENVIRONMENT OF BUSINESS ........ 3
Global Environment ........................ 4
Management Functions ...................... 4
Global Benefits ........................... 10
3 - CYCLE TIME REDUCTION AND
GLOBAL PROCUREMENT .................. 12
Cycle Time Reduction Through Loops ........ 12
Case: Cycle Time Reduction At Xerox ....... 17
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4. Registrar organizations have been certifiedby the International Standards Organization in all developed countries andin some developing countries. "Clearly, this is thebasis for supplier selection and development. 7. 49 7 - SUMMARY AND CONCLUSION .................... "The reality is that as many as 9 % of the existing activitiesare nonessential and can be eliminated. 25). The essential battlegrounds of 198 smarket place were existing, well-defined markets. New York: FreePress. Evaluation and reward systems must favor the freeexchange of information and commitment to global objectives over the abovelocal interests, so as to obtain a positive attitude to integration andthus favor a climate of continuous improvement. 11). 17 Case: Reducing Cycle Time At AMSTAN ....... (1996, September). Demand-flow manufacturing,thus, "requires constant movement, and constant adjustment, and that meansthat flaws and bottlenecks show up quickly. Second thoughts about ISO 9 . Single/multiple sourcing policies. The conditions that favor an organic structure are also supportive ofthe concept of mass customization. This set of standards criteria is used in the certification ofdistributors and non value-added processes or services. Personnel Journal, 73(1), 61. Even informal relations become fundamental whendealing with firms which operate on a global scale. Henkoff, R. (1993, August). Case: Reducing Cycle Time At AMSTAN The American Standard Inc. TQM is a logicaloutgrowth of the quality control strategy promoted for years by the lateEdwards Deming. Such conditions, thus,lead naturally to the development of the mechanistic organization (Davidson& Davis, 199 ). M., & Morgan, J. All loops must be integrated if total business-cycle time is to be reduced. (199 ). Maital, S. The greater choice of suppliers in international markets makes itpossible to reduce costs and improve the quality of procured materials. 23). As a result, some projectssuffered when it took too long to roll out new applications that were acentral part of reengineering. The union agreed to participate, but only if the company guaranteedjob security for its members. To survive in the contemporaryand future environments, organizations must eliminate "red tape andminimize the time required to make and execute decisions .... 11). ISO 9 isa voluntary system for which a company must be certified if recognition asan ISO 9 firm is desired or if ISO recognition for one or more specificproducts is desired (Rondinelli & Vastag, 1996). 11). 31). (1995, Winter). Assessment of Mass Customization Possibly the greatest advantage of a mass customization strategy isthe capacity that such a strategy provides for a firm to respond quickly tochanges in the firm's external environment. To prepare for the audit, the company seeking ISO 9 certificationneeds to create or revise a manual of operations to meet theserequirements. (199 ). (1994, January). Communication and Mass Customization A mass customization strategy depends upon an information systemnetwork that connects vendors and retailers. These advantages derive more from how the companymanages the various activities than from where these are located.Coordination among development centers allows an exchange and increase intechnological expertise, while coordination in the purchasing of materialsmakes it possible to obtain economies of scale and create a base for long-term agreements with suppliers. In suchconditions, the "objective for most companies will be to ensure thestability of material deliveries by encouraging the supplier's efforts toimprove quality" (Northey & Southway, 1993, p. 3 ). 23). Change management means, among other things, adjusting theway workers are evaluated and rewarded to get them to support changes.This procedure "means evaluating workers on their breadth of technicalknowledge and giving bonuses based on their performance on specificreengineering projects as measured in business results" (Moad, 1993, p.25). 35 ISO 9 Certification Procedures ......... Thus, the organization adopted ISO as "an officialnickname, derived from isos, a Greek word meaning equal, as in isobar,isometrics, and isosceles triangle" (Henkoff, 1994, p. Strategic managers must develop abroader set of conceptual skills to fulfill their areas of responsibilitywithin the organization. 12). 2. Such internal organizationalstructures are designated as organic in character (Daft, 1996). In the 199 s, both theeconomic and industrial/marketing environments are dynamic. Corporateimagination and expeditionary marketing. ISO 9 registration alone, however, dopes not guarantee entry into the EuropeanCommunity market. Organizations began to realize thatthey could reduce substantially the make/ship-loop cycle time. Gulati, R. (1993, 1 August). (1993, 28 June). A commitment for long-term achievement, a desires "to win at alllevels, and the ability to sustain this obsession over a long period oftime is the pursuit of success with excellence. Market globalization requires achievement of high standards ofperformance in quality, timeliness, total costs, and customer service. 27 Convenience of use of Mass Customization .. Product standardisation and processsimilitude. TQM, as anexample requires the involvement of every facet of a company's operationand every company employee in the effort to promote high product quality(Atkinson, 199 ). To turn the situation around, Xerox had to make some changes thatwould affect quality, production, and cost. As an organization isonly as effective as its sources of supply, decisions concerning thecreation and management of the supplier base are among the most importantand fundamental in the purchasing process. It is also possible toorganize and coordinate the company structure on an international basis totake advantage of cost and technology differences across countries(Mitchell, 1995). Integrate internal functions to develop and implementpurchasing strategies. 27). 43). The answer for was to "change the culture" by reorganizing to supportreengineered processes (Moad, 1993, p. Why globalization mustprevail. (1991, July-August). "A systematic review of the supply market permitsthe assessment of the availability of strategic materials in terms ofquality, quantity, and risk. Zuckerman, A. Before seeking certification, companies must be aware that acertificate issued by an accredited registrar may not be recognized by acompany's customers. Pine, B. 26). The International Standards Organization located in Geneva,Switzerland is comprised of representatives from 89 countries, and wascreated to promote the development of product and service standards thatwill be recognized and accepted by each member country (Ferguson, 1994).ISO 9 is the set of standards that was created in the pursuit of thisobjective (Farahmand, Becerra, & Greene, 1994). In the transition from mass production to mass customization,organizations will become environments within which managers coordinate theactivities of independent individuals and teams in the use of resources andtechnology to provide customers with the exact products they desire atcompetitive levels of price and quality. Pine, B. 23). The manual is sent to thecertification agency for review before scheduling an on-site audit. The time which is necessary tocreate the minimum threshold of experience within a firm is greater thanthe time which is required if a coalition is formed (Gulati, 1995). Pine, B. Advocates of thequick response system concept would like everyone to believe that all isidyllic in the quick response world. 12 Case: Cycle Time Reduction At Xerox ....... Often the shared understanding of therole of management becomes an instrument of integration which is morepowerful than formal structures and systems of the organization. Porter, M. The changing environment of internationalbusiness, however, is causing the conduct of international business toevolve from a multinational to a global perspective. Its rolebecomes even more crucial, when a global perspective is assumed by amultinational corporation. Toreach these levels of performance simultaneously, a company must change andimprove all the phases in the value chain continuously. Marketintegration means that choices in design, purchasing, and assignment ofproduction and distribution tasks must coordinated on a global scale togain competitive advantages. "In many cases, the role of procurementprofessionals must shift from a short-term, tactical orientation to alonger term, strategic orientation. 25). Chapter 3 CYCLE-TIME REDUCTION AND GLOBAL PROCUREMENT Increasing globalization of both market and production has placedadded pressures on firms to reduce costs. Integrate with selected suppliers to develop long-termstrategic relationships and common advantages. Hutt, M. In manufacturing activities, competitive advantages can be developedthough a global strategy that incorporates (1) the effective utilization ofscale economies, (2) the concentration of learning in one plant or in asmall number of plants, (3) the integration of operations, (4) thecoordination or the concentration of activities to support production andproduct development, and (5) the development and application of effectivemanufacturing policies. To reducecycle time, many organizations attempted to rely only on new technology.Technology is an expensive and often ineffective approach to cycle timereduction. If one of these areas is not documented, ordoes not meet the ISO guidelines, it needs to be addressed. Campbell, R. IBMSystems Journal, 32, 4 -64. Atkinson, P. Only thelargest companies, "have had enough clout to insist that their material bedelivered 'just-in-time'" (Northey & Southway, 1993, p. With the identification and comparison of thestrengths of the buying and supplying firms, it becomes possible to makemeasured value judgments, and to identify and prioritize the firm'sstrategic options" (Rajagopal & Bernard, 1993, p. As forecast periods were extended, the potential for error anddisagreement increased. 3 ). Choosing a compatible registrar towork with is essential for a successful registration is an essential pre-certification task for a company. The availability of informationsystems allows greater communication flow and the development of goodsupply chain strategies. The strategic-business-development loop is "probably the most poorlymanaged of all loops" (Northey & Southway, 1993, p. In the 198 s, most companies focused on themake/ship loop. "Internationalization and cosmopolitanism are the newcharacteristics which are required of this person. Integrate long-term strategic purchasing plans with corporateplanning activities and outputs.Abolish Inertia "A firm standing still in a highly competitive market is losingground. One of the principal competitive advantages derives fromthe transfer of advanced innovations in process technologies, informationtechnology, and product, raw-material and components technologies.Similarities of products and processes within the company help the transferof technological improvements. 61). Chapter 5 INTERNATIONAL STANDARDS: ISO 9 ISO 9 is a quality assurance system that companies can use as apart of a total quality initiative or as a standalone system. Organizations that focuson cycle time as a productivity measure, can both decrease delivery timeand improve quality, thereby creating a more satisfied customer. (1991). Case: Cycle Time Reduction At Xerox For decades, the Xerox name was synonymous with the copy machine. Quickresponse technology. A., & Vastag, G. Like many companies, once TI decided in 1988 to start redesigning keybusiness processes, it wanted quick results. With no strategy is this fact moretrue than mass customization. A double problem arose for those organizationswhose competitors could deliver the correct product in a shorter cycletime. All registrars follow the sameguidelines, but one that is involved in the same specific industry as thecompany seeking ISO 9 certification could prove more helpful.Credentials of the registrar should be researched by a company beforeentering the ISO 9 certification process. It's not just quicker delivery of applications that reengineeringrequires. Challenges to Procurement Management in An Organization Operating in A Global Economic Environment table of contents Page NumberChapter 1 - INTRODUCTION .............................. Business marketing management. 21 4 - MASS CUSTOMIZATION AND GLOBAL PROCUREMENT .................. 23). Cost reduction is necessary notjust to improve profitability, but rather in the contemporary and projectedbusiness environments to remain viable competitors. Prahalad (1991) referred to this approach as "expeditionarymarketing" (82). How to be a great client server. The initial step in the ISO 9 registration process is the selectionof a registrar organization. Comprehensive and incisive management is anintegral function in the conduct of any international business. Through coalitions a company is repositioned morequickly than through internal development. 36 Advantages and Disadvantages of Certification .............. Identify and Manage the Supplier Base. H. 39). E. Chapter 6 STRATEGIC PROCUREMENT MANAGEMENT In a globally-operating firm, procurement must become a strategicresource for the company. J. (1992, June). "Too often, thisloop is encumbered by size, politics, economics, and legal and financialinertia" (Northey & Southway, 1993, p. J. Rules andregulations typically may be not written down, or if written down may beignored. Identify and Classify Materials. Nevertheless, benefits areconsidered by most registered companies to outweigh the costs ofcertification (Farahmand, Becerra, & Greene, 1994). New Steel, 12(9), 82-86. Does familiarity breed trust? Appliance, 39-44. The great majority of companies that have gained ISO 9 certification consider the process and the system to be worth the effort.Many firms that have not attained such certification, however, find muchabout the quality assurance system with which to quibble. For example, distributors may not be providingtimely sales information because they are using the order-point method ofsignaling their needs. 3 ).The plant is in fact even older than its appearance. Harvard Business Review, (4), 36-45. Xerox made such a commitment in the contractsigned in 1982, "resulting in the Amalgamated Clothing and Textile WorkersUnion (ACTWU) and Xerox becoming business partners" (Anfuso, 1994, p. What is new about globalization in the contemporary period is thatinnovations "occurring within any of the developed economies can betransferred to and adopted within any other developed economy in a minimumamount of time" (Lewis & Harris, 1992, p. 2. Thus, if acompany is not prepared to make ISO 9 a way of business life,certification should not be sought. 31). Another significant advantageof the quick response concept in global marketing is the added flexibilityand speed with which a company can respond to change in diverse marketssimultaneously. The shorter cycle time meant that competitors could produce at lowercost and did not require such large inventories. Whether the vendor/retailer relationship under a quick responseprotocol is an improvement over the past is determined largely on the basisof perceptions. Pine, B. The reorganization converted the plantsinto seven focus factories in which narrow lines of products are producedin small, self-managed cells that contain their own finance, engineering,HR and quality staffs" (Anfuso, 1994, p. 13). Human ResourceManagement, 29, 363-381. H. An organic structure, however, is more appropriate for the fluidglobal economic environment. Catlow, G., & Cryer, D. 12). 31). The supply loop is the time fromrelease of the purchase order to stocking the correct materials in theright quantities at the right point in the manufacturing process. Making mass customization work. 61). The growing internationalization of business activity furthercomplicates the process of inventory management to support a masscustomization strategy in terms of (1) developing accurate and timely dataon goods production and stocking levels, (2) developing and projectingaccurate and timely data on product requirements, and (3) incorporating awide variety of multinational and international economic data intomarketing management activities. Phase III: Abolish or Avoid Inertia: This phase involvescommunication and implementation of the strategic procurement objectives toand by all affected parties.Input Analysis Phase I focuses on the need to "be continuously aware" of the internaland external environments of the firm (Rajagopal & Bernard, 1993, p. Wade Ferguson,writing in the journal Industrial Management, stated that ISO is an acronymfor the International Standards Organization (Ferguson, 1994). 22).Rather, ISO 9 "is a way of doing business" wherein "commitment must bemade by top-level management toward the implementation and certificationprocess" (Farahmand, Becerra, & Greene, 1994, p. W., & Harris, M. The entire certification process can last betweennine months and 24 months. (1994, May). For example, TI reorganizedinto "centers of excellence. Mitchell, K. 3 Global Environment ........................ Mass customization is defined as "making products tailor-made for eachindividual buyer, but wherein production levels provide economies of scale"(Westbrook & Williamson, 1993, p. In each phase ofthe value chain (design, purchasing, production, and distribution), theseactions must involve organization and management, management systems, andtechnology management and application. 33 The ISO 9 Concept ...................... Additionally,union leaders would "have to become greater partners with management tobring about change" (Anfuso, 1994, p. The hierarchical levels can besummarized as" follows (Rajagopal & Bernard, 1993, p. This determination istermed a 'strategic purchase intent.' This concept is an adaptation thatencompasses active management processes that include" the following(Rajagopal & Bernard, 1993, p. ISO 9 2 does not include a design element. Balasubramanyam, V. Systems contracting agreements. 13).Procurement and supplier information collection, analysis, anddissemination should be part of procurement's function-it can affect thefirm's ability to gain and retain a competitive advantage. Results of these and other management-union cooperative initiativeshave been substantial. The partnership concept remainsvalid, but the identity of the senior partner often changes. Mass customization:Japan's new frontier. 31).Demand-flow manufacturing, by contrast, calls for "collapsing cycles," asthe product must be moving continuously, and never bogged down in "deadtime" (Barrier, 1992, p. Planning Review,21, 23-24. plumbing fixture manufacturing plant inTrenton, New Jersey has a facade "whose design speaks dearly of the 193 s,with echoes of the then-popular Art Deco style" (Barrier, 1992, p. Arnold, K. 25). K. Strategies andevaluation must be related simply because the business environment isdynamic in nature. 15). (1993, July-August). The make/ship loop is the time fromreceipt of material, through the value-adding conversion steps, to shipmentor transfer of a finished product to the distribution loop. (1993, 19 July). At Amstan, demand-flow manufacturing "fits under the big tent known asTotal Quality Management, the cluster of techniques that many Americanbusinesses have been adopting to improve the quality of their goods andservices" (Barrier, 1992, p. Leaving room for individual and team contributions. "If the Trenton plant evokes nostalgia for bygone days ofAmerican manufacturing, it shouldn't, because there is nothing backward-looking about what is happening in that plant, and in dozens of otherAmerican Standard plants around the world. The management-union team discovered ways to save $2.9 million,without sacrificing quality. Industrial Engineering, 26, 22-23. It is also an information-based problem. The demand-flow system "improves yourefficiency 15 to 2 percent, it improves your quality, it shortens yourcycle time so that you're more responsive to the customer and can gainmarket share"-and, almost if not quite incidentally, it drastically reducesinventories (Barrier, 1992, p. The delivery of high levels of customer service is becoming moredifficult, as the customer base for most firms becomes both more diverseand more demanding (Kiely, 1993). Boynton, A. Within the framework of such assumptions,both "product specifications and demand are relatively stable andpredictable" (Boynton, Victor, & Pine, 1993, p. J., II. ISO 9 : The inside story. Of the company's 32, employees, approximately one-half have beentrained in demand flow. 11). Boston: Harvard Business School Press. (1993, September-October). Cycle Time Reduction Through Loops Global competitiveness is forcing companies of all sizes to go to ever-greater lengths to improve customer satisfaction. Barrier, M. (199 , Winter). Using intent consistently to guide resource allocation. Look at the end-to-endprocesses that are really important to an organization's success, thenrapidly redesign who does what and give workers new tools to get more done. N. These fivedecision types are as follows: (a) Source selection decisions; (b)Contracting decisions; (c) Supplier performance and reward decisions; (d)Supplier development decisions; and (e) Supplier management decisions(Rajagopal & Bernard, 1993). J., II, Victor, B., & Boynton, A. J. Agreements and coalitions tend to be more important in relation to aglobalization strategy than in relation to other strategies. JIT-based purchasing systems 4. Abig part of the reason is that people now understand that "they're expectedto help create new business processes, not just automate what's alreadythere. Hamel, G., & Prahalad, C. Because the ISO 9 quality assurance registrationprocess employs documentation as a means of internal auditing, firmsseeking registration should set up a system for collecting and processinginformation before initiating the registration process (Zuckerman, 1994a).The ISO 9 registration process is a comprehensive approach todocumentation at all levels and departments within a company. To implement an integrated procurement strategy within a firm, andbetween a firm and its suppliers, six steps are considered to be essential. The transfer of just one of these classes is ineffective(Gulati, 1995, pp. Datamation,39(15), 22-25. M. To achieve maximum flexibility, "you mustorganize your production line to make every model every day, so you canmake anything any time" (Barrier, 1992, p. Kiely, T. Global Benefits Globalization produces economic benefits for all participatingeconomies (Dunning, 1995). In effect, theterm mass customization refers to a practice of mobilizing technologicalinnovations in communications, information systems, and productionprocesses to mass produce products that are designed to satisfy the demandsof a particular market segment as opposed to being designed to satisfy anassumed universal demand (Boynton, Victor, & Pine, 1993). Theimplications of repeated ties for contractual choice in alliances. 17). Some of the pertinent factors required to formulate acompany strategy properly are data and information about existing suppliersand products, new suppliers and products, economic factors, and internaldecisions indicating what the company actually wants from its commodities,components, parts, and capital equipment. Organizations functioning within a dynamicexternal environment tend to be chaotic in character-defined as "muchlooser, free flowing, and adaptive" (Daft, 1996, p. The diffusion of processtechnology followed after-sometimes centuries later" (Lewis & Harris, 1992,p. Planning Review, 21, 6-13, 55. Companiesseeking certification typically are required to document operationalprocedures and processes as well as corrective action plans to addressproblems arising with the procedures. 19): 1. Strategic planning is a process that generatesspecific actions which are required to carry out a particular strategy. (1992, Spring). 9. CIO, 3 -34. The reason is because globalization is not theresult of a planned activity by government or military power "toward everlarger geopolitical entities. Industrial Management, 36, 22-24. Farahmand, K., Becerra, R., & Greene, J. Northey, P., & Southway, N. The essencehere is to create an effective long-term plan with highly motivated andcommitted staff to achieve a sustainable, competitive advantage" (Rajagopal& Bernard, 1993, p. Competitors with shorter cycle times, however,continued to increase market share. At its core, business processreengineering (BRP) sounds simple and intuitive. Chapter 7 SUMMARY AND CONCLUSION One of the more crucial aspects of managing in a global economicenvironment involves procurement. In Europe,such boards are subject to government regulation. Journal of Business Strategy, 13, 61-64. 38). It isa strategy wherein customer satisfaction is the paramount objective (Pine,1993a). The identification stage is made up ofnine activities, as follows (Rajagopal & Bernard, 1993): 1. "If a proactive approach toplanning is adopted, then the success of strategies will depend on theavailability of concise, accurate, and up-to-date information, relevant tothe buying firm and its supply environment. Cycle Time Reduction Through Reengineering Reengineering projects are difficult. Reengineering and cycle time reduction have been successful at TexasInstruments (TI) Inc., where reengineering has been going on for severalyears. The challenges to procurement managementin an organization operating in a global economic environment is examinedin this research. TI has improved its reengineering success rate to about 8 percent. The ISO 9 Concept The ISO 9 quality assurance standards were introduced in 1987 bythe International Standards Organization (Zuckerman, 1994). Mass customization enables firms to actquickly to respond to changing environmental conditions to produce productson a mass scale for the unique demands of a discrete market segment. After setting early reengineering goals and assembling teams, TIdiscovered that systems analysts and developers "often couldn't make theadjustment to reengineering quickly enough. 3. (1994, October). 16). Although ISO 9 certification provides advantages to a company, the registration process isexpensive. In the meantime, companies should ask customers what registrarsthey or their jurisdictions recognize. J. 5. Sustaining enthusiasm by providing new operationaldefinitions as circumstances change. Identify the Strategic Tools Available. McKinsey Quarterly, (2), 114-131. With respect to internal organization, successful global companiesmust have an organization capable of managing multidimensional problems.Within this context, it is important to create an organizational structurewhich is complementary to the line structure, "with task forces andcommittees which represent a permanent and non-transitory supplementarydecision-making body. Deming's quality control strategy was developed withmanufacturing processes in mind (Ferguson, 1994). New competitivestrategies: Challenges to organizations and information technology. 82). Another advantage of the ISO 9 quality assurance process is thatthe registration process does not impose an external quality system on acompany, but rather develops a quality assurance system based on theprocesses already at work within the company (Arnold, 1994). Several factors are at work in time compression management. Management must not be limited by current organizational structure orcurrent thinking" (Moad, 1993, p. 3. What is happening at American Standard "exemplifies the changes thatmany large firms are making" (Barrier, 1992, p. Assuming the quality system conforms to the selected standard, theregistrar issues a certificate describing the scope of the company'ssystem. In addition, the company increasedits return-on-assets from 8% to 14% and became the first major U.S. There is no way thatbusinesses can avoid the impact of those changes. N., & Greenaway, D. Solomon, H. (1994, September). Competitive advantage of nations. 39 6 - STRATEGIC PROCUREMENT MANAGEMENT .......... A quick response system hasbeen referred to as an electronic partnership between vendors andretailers. 28 Problems With Mass Customization .......... A mass customization strategy also poses problems associated withformal strategic planning. It's possible, for example, that a competitive advantage couldcome through a technology being developed jointly by partners ororganizations in the supply chain. In general, an ISO 9 certificate indicates that a company hasdocumented how workers perform every function that affects product and/orservice quality, and the a company installed mechanisms, systems, andprocedures that are being followed in 18 different areas (including amongothers design, process control, purchasing, service and, inspection andtesting). Bowersox, D. It is the organizational structure that affects thecoordination of activities, delegation of authority, communication flows,and task responsibilities, both within the procurement function and betweenprocurement and other departments of the organization (Rajagopal &Bernard, 1993). Success in the contemporary and future periods for most organizationsid dependent upon a reduction of new-product-introduction time. Ferguson, W. (1995, Winter). If a firm is a small-scale retailer or a vendor in adistribution chain with small retailers, the perception is likely that thequick response system relationship is an improvement over the oldersituation. 78). Acrossthe Board, 7-9. American Standard needed to improve its cash situation quickly, andone way to do that was to reduce inventories of both finished goods and rawmaterials. The quick response system is changing some vendor/retailerrelationships in yet another way. 22). 12). Examples include resource allocation systems evaluationsystems, reward systems, and a sanctions system to ensure disciplinedmanagement" (Rajagopal & Bernard, 1993, p. The essentialbattlegrounds of future market places is and will be fundamentally newmarkets. L. California Management Review, 37(2), 47-65. 31). Phase II: Initiate Activities: This phase involves theidentification and integration of the strategic planning process. 5. Depending on the size, type, andorganization of a firm, estimated audit preparation time can vary from1, to 1,5 hours (Zuckerman, 1996). Nor is it the product of some growingideological conformity on how we should live. Aprocurement manager needs to identify existing and desired behavioralelements when adopting the administrative tools required to achieve thedesired strategic plans. Minimizing the new-product-introductioncycle time requires an organization to minimized cycle times in otherloops, and to integrate the other loops with the new-product-introductionloop. Reappraising the eclectic paradigm inan age of alliance capitalism. "This complacency rippled through the distributionand supply loops as well" (Northey & Southway, 1993, p. This standard criteria set is intended to be used in thecertification of companies whose products include a design element.Design, development, production, installation, and service are covered byISO 9 1. AtAmstan, however, the "results were less than impressive. While agreements are agency developed, the issue has yet to beresolved. 22). 12). 3. Mostcycle time reduction programs are closely tied to an organization's qualityimprovement program. To maintainregistration once obtained, a company must undergo at least one complianceaudit each year to demonstrate that ISO 9 registration standards arebeing maintained. The product standards and material specificationsestablished by the community also must be met. The emphasis in developing apurchasing information system should be on information that assistspurchasers in making decisions in line with the firm's competitivestrategy, which is developed and accepted beforehand" (Porter, 199 , p.47). A higher degree of vertical integration involvesfewer risks when it is realized through agreements and coalitions thanwhen such integration is attained through acquisitions or the expenditureof internal resources. The future of supply chain management involves assessing players andactivities in the supply chain and deciding where and how to achieve aspecific competitive advantage. 18). Within distribution chains characterized by a quickresponse network, however, large-scale retailers typically exercise themajor influence over order levels, production decisions, shipping times,and many other marketing management tasks. In relation to production, an aggregate planning of plants, accordingto the global requirements of the distribution system, can be an advantage,because it becomes possible to shift production from one plant to another,to improve the development of plants and to optimize fluctuation in therate of change. II. ApplianceManufacturer, 42, 8. Many product and brands are nowbeing produced with the intent that they will be marketed only through massretailer who are able to best exploit quick response systems. 19). Flexible circulation in the Pacific Rim:Capitalism in cultural context. (1993, March). Reengineering usually brings problems and, very often, failure.Failure usually "has more to do with faltering support from uppermanagement sponsors than with late or inadequate information systems.Projects also often fall short simply because top management thinks theyinvolve reengineering when they really don't" (Moad, 1993, p. "Typically, you'll find that 9 percent ofthe time, nothing is happening to the product" (Barrier, 1992, p. These companies may have "closed the gap ... O., & Neuman, J. The Trenton plant wasbuilt in 1925. Information gathering andprocessing is a key ingredient in the process of risk identification andcontainment, and its significance is reflected in the composition andflexibility of the decision-making unit (Hutt & Speh, 1997).Initiate Activities For management to make effective decisions, it is necessary toidentify the options available. The relative strength of existing andpotential suppliers is important in developing the strategic optionsavailable to a firm. The cost and time compression which can be obtained by adopting aglobal strategy is greater than that which can be obtained by adopting adomestic strategy. H., & Davis, S. (1994, August). These steps are as follows (Rajagopal & Bernard, 1993): 1. Effectively managed suppliersare a major asset to the buying firm. Sheridan, J. It is important whenselecting a registrar to check the registrar organization's qualificationsand make sure the registrar organization is accredited (Zuckerman, 1996). Team-based organization, thus, isone of the keys to the success of a mass customization strategy (Boynton,Victor, & Pine, 1993). Phase I: Analyze Inputs: This phase involves informationgathering and appraisal. Market globalization, on theother hand, also depends on the behavior of companies. As themanufacturing cycle time started to decrease, it became apparent that thecycle time for processing a customer's purchase order was greater than thetime it took to manufacture the product. A continuous stream ofinformation between vendor and retailer is required to enable both entitiesto provide superior customer service, and to permit the development ofefficiencies in production management, inventory management, and shipping.The quick response concept is widely regarded as the key to growth formarketing organizations in the mid- and late-199 s and beyond inconjunction with mass customization strategies (Knorr & Neuman, 1992). 81). The external environment factors that influence an industry or a firmare generally grouped under headings such as "micro," "macro," and"international" (Rajagopal & Bernard, 1993, p. Identify the Process Elements in Strategy Development. 3 Assessment of Mass Customization .......... Most analysts and developers at TI were used to creating applicationsfor a single, narrow functional department such as purchasing or shipping.In reengineering, however, they were "suddenly asked to deliverapplications that could support newly redesigned business processes thatcould span several departments (Moad, 1993, p. The reaction of some manufacturers wasto reduce inventories. 6. 31). Global companies cannot allow procurement to operate in isolation fromthe other elements of the business. "Decisions within the supplier base should bemade with the intent of developing particular supplier capabilities thatare consistent with the firm's competitive and productive strategy"(Rajagopal & Bernard, 1993, p. 3 ). If you're set up on the flowprocess, everything's visible. Creating culture change: The key to successfultotal quality management. (1996, 2 May). 4 ). Rather, such decisions are madejointly by vendors and retailers in the same distribution chains. Monczka, R. Industry Week, 245(1 ), 16-42. A contemporaryapproach to management that is being employed by many firms to such ends iscycle time reduction. Fortec's labors with ISO 9 certification. Companies then began to focus on the manufacturing cycle. Those thatcannot meet those demands will not make it into the next century.Unfortunately, many companies have not even started to reduce their totalbusiness-cycle times. One of the majorcriticisms of ISO 9 is the variation in costs and procedures found amongthe certified registrar organizations. The approaches to cycle time reduction discussedin this research are significant; however, other worthwhile approaches alsoare described in the literature (Catlow & Cryer, 1995). The new-product-introduction loop is the time from identification of the need for anew product to delivery of the first unit of product to a customer. FiberOptics News, 1-5. Inthe early 198 s, however, Xerox lost the leadership of the copier market.Competition from Japanese firms cut the Xerox market share from 8 percentto less than 5 percent, and Xerox approached bankruptcy (Anfuso, 1994). 31). It becomes reactive and loses its competitive edge. (1995, October). references Andel, T. A mass customization strategy is a customer-oriented strategy. Certification is listed in a public directory and companies arefree to display the registrar's mark on their literature. Proponents of shortened cycletimes contend that success in such an effort will lead to improvedprofitability, higher levels of customer satisfaction, and increased marketshare (Campbell, 1995). In addition, TI has focused extensively on what consultants like tocall "change management" techniques to better support reengineering (Moad,1993, p. It is, rather, the organicresult of the virtuous cycle ..., by which economic convergence and thediffusion of innovation raise standards of living over time" (Lewis &Harris, 1992, p. 1 2 - THE GLOBAL ENVIRONMENT OF BUSINESS ........ Through the development of a global procurement strategy that focuseson the company's competitive strength, a company can enhance its marketposition. 53 Chapter 1 INTRODUCTION The conduct of international business by multinational corporationsproceeds according to well accepted concepts which have been developed overthe past several decades. GaryHamel and C. Moad, J. Union permission was required to allow the changesto be made in work rules that were protected by contract. The toughestadjustment for developers to make was to begin thinking and working towardcreating systems to support new business processes rather than doing whatthey were used to doing: automating the existing way of doing business"(Moad, 1993, p. San Diego, California: Pfeiffer & Company. Mass Customization and Organization The concept of mass production is based on assumptions of stability inboth product and process change. London: TheMacMillan Press Ltd. Mass customizing products andservices. To obtain competitive advantages in global industries, allproducers, including those in other countries, must be considered. A third-party registrar can grant ISO 9 certification to a companyonce the registrar has verified that a company's quality system conforms tothe requirements of the selected standard-ISO 9 1, 9 2, 9 3. In the past, manufacturers and large-scale distributors have typically been the pivotal operators within adistribution chain. 61). (1993, October). In a global procurement strategy, it is important to reducetotal costs as well as design, production, and distribution times(Mitchell, 1995). Reducing the retail cycle time is a significant advantage provided byquick response systems to global marketers. Harvard Business Review, 69, 81-92. Thus,management practices and procedures, together with the attendant productionand inventory systems, must be capable of supporting effective decision-making in these dynamic environments. Chapter 4 MASS CUSTOMIZATION AND GLOBAL PROCUREMENT Mass customization is a relatively new concept in business strategythat, while appearing to be a contradiction in terms, is a rationalevolution in competition and marketing theory (Pine, 1993). on cost,quality, and cycle time," but they will not have developed the "capacity tostake out new competitive space" (Hamel & Prahad, 1991, p. One estimate is that up-front costs along average approximatelyUS$35, for the initial registration (Zuckerman, 1994). "As an American Standard factsheet puts it, manufacturing of this kind 'is customer-driven, rather thanforecast driven.' Instead of producing in long runs and large batches,then storing products until they are sold, demand-flow lines create avariety of items each day, keyed to direct customer orders" (Barrier, 1992,p. Managing cycle time. (1995, January). Economic Geography, 71(4), 364-382. 8. Anorganization's total business-cycle time is measured "from the time acustomer's need is identified to receipt of payment from that customer forthe finished product" (Northey & Southway, 1993, p. Demand-flow is a "pull" system, andinstalling a demand-flow production line involves starting with the laststage before a product leaves the factory, and "working backward" (Barrier,1992, p. There, arefive broadly defined types of decisions that have been identified as havingan impact on the character and management of the supplier base. Cycle time is the period between a product's design and the time ofdelivery of the product to the customer. Global strategies facilitate the possibilities ofgreater advantages of the purchasing, production and distribution economiesof scale by working on large manufacturing volumes, made possible throughbeing present in a large number of markets. Competition-related strategies. Global Environment Globalization in industrial trade is growing in relation to bothfinished products and components. Byadopting a strategic perspective, a purchasing manager can change theperception of her or his position by others in the organization.Additionally, the ability to identify and appreciate corporate culturalinfluences and interdepartmental relationships can elevate the purchasingfunction from a tactically oriented to a strategic level (Rajagopal &Bernard, 1993). Formal strategic planning is defined as theprocess of determining the mission, major objectives, strategies, andpolicies that govern the acquisition and allocation of resources to achieveorganizational aims. (1993). Harvard Business Review, 71, 1 8-113. 22). Researchers also tendto think that innovation is fostered by an organic organizationalstructure, while innovation tends to be stifled by a mechanisticorganizational structure. Within the context of a quick response system, vendors andretailers no longer determine order levels, make production decisions,determine shipping times, or perform a host of other marketing managementtasks independently of one another. The challenges to procurement managementin an organization operating in a global economic environment were examinedin this research. (1993, Fall). 3. Operationally, strategic development might be conceived asproceeding in a progressive, step-like fashion, where successfulimplementation of lower level strategies is necessary before 'higher level'strategies can be operationalized. Most attempts to estimate these benefits haveconcentrated on the achievement of completely free trade in manufacturedproducts. "Although the supply loop is a significant contributor to the totalbusiness cycle time, most companies are powerless to force suppliers toreduce their cycle times" (Northey & Southway, 1993, p. 49). "It is believed that this phenomenonwill grow as it is aided by the progressive reduction in barriers betweencountries and differences between consumers. Some of the tools a purchasingmanager may utilize when developing a system to achieve the strategic goalsinclude" the following (Rajagopal & Bernard, 1993, p. To beeffective, however, strategies must retain their core identity and be"altered radically only when major changes dictate a total reevaluation.Procurement managers deal with a wide range of diverse suppliers-from thevery small to the very large, and from the simple job-shop to the high-techspecialty producer. 4 Global Benefits ........................... This approach increased thetotal cycle time, but time was not perceived by most organizations as acritical issue. 12). (1993, September-October) Making mass customizationhappen: New strategies for the new competitive realities. Further, as the procurement organization isdesigned, communication and working relationships are determined, authorityand responsibilities assigned, policies and procedures specified, andprocurement's purpose and contribution to the firm is established andrecognized. TI has successfully used BPR to redesign the material procurementprocess for the company's defense systems business (Moad, 1993). 6. 19 Cycle Time Reduction Through Reengineering .............. "By the end of 1992, the partnership betweenACTWU and Xerox had accomplished its greatest feat thus far (Anfuso, 1994,p. ManagementAccounting, 76(7), 34-35. 2. "TI wanted to cut by 5 % the time ittook to respond to a customer's requirement for customized semiconductors.And TI wanted to do it in less than a year" (Moad, 1993, p. Thisdocumentation must included a quality assurance manual prepared by theapplicant company. Focusing the organization's attention on the essence ofwinning. 3. When several different culturalbackgrounds are present within a company at any one time, management cannotassume that all values are common. As soon as manufacturers focused onprocesses, they could see the waste associated with changeovers, qualitydefects, process control, factory layout, machine downtime, and scheduling"(Northey & Southway, 1993, p. The purpose of an information system is to support decision making andplay a key role in the process of innovation. Advantages and Disadvantages Certification Because an increasing number of companies around the world are gainingISO 9 certification, a company without such registration is at anincreasing disadvantage in the global marketplace. While thereis a logical appeal to this explanation, it is apparently incorrect.Ronald Henkoff, writing in Fortune magazine reported that the correctpronunciation of ISO is not eye ess oh but rather ice-o (Henkoff, 1994).The reason is that the International Standards Organization decided againstthe use of an acronym because such an acronym would not be pronounced thesame in every language. ISO9 certification. 52 REFERENCES ......................................... 82). 12). "Thecontrol mechanism is centered on the administrative tools the purchasingmanager must identify for successful implementation of a strategicprocurement plan. International Journal of Purchasing andMaterials Management, 29(4), 13-2 . As an example, certification awarded by a registrarin one country may not be accepted by the accreditation registrar agency inanother. 25 Mass Customization and Organization ....... C., Victor, B., & Pine, B. The peculiarcharacteristics of the internal organization and of the role of managementpresent some notable similarities in the various phases of the operationvalue chain" (Baron, 1995, p. The ISO 9 System Structure ISO 9 is a set of guidelines to aid in the selection and use of theappropriate quality assurance standards. The formal systemsalone are not able to satisfy the enormous information needs which arenecessary to coordinate such a complex configuration" (Baron, 1995, p. Such stabilityfacilitates the standardization of products, the centralization of decision-making, the routinization of work and rewards, the development andenforcement of standardized rules and procedures, and the allocation ofwork on a dedicated basis to specialized tasks. The unwritten rule concerning an ISO 9 audit is that, if allpersonnel were suddenly replaced, the new people, properly trained, coulduse the documentation to continue making the product or providing theservice as before (Zuckerman, 1996). Identify Behavioral Elements in Strategy Development. Performance-related strategies. Thesefactors include (1) company organization, (2) management as a strategicresource in integrating activities along the value chain, (3) the use ofmanagement systems which facilitate the flow of operations, and (4) the useof information technologies (Mitchell, 1995). People coulddemonstrate pockets of success here and there, but it wasn't a cohesiveprogram" (Barrier, 1992, p. The investment in the ISO 9 registration process involves time,money, and manpower. Systems-related strategies. Rajagopal, S., & Bernard, K. Integrate objectives and policies to develop an appropriateprocurement strategy for each supply market. If a firm is a large-scale retailer, the perception is likelythat the quick response system relationship is a tremendous improvementover the past situation. Bydefinition, thus, the strategic planning process begins subsequent to theadoption of a strategy. It is possible to limit ISO 9 registration to asingle product or service offered by a company, or to the products orservices created at one specific location of a multi-location company(Ferguson, 1994). Economicintegration and foreign direct investment: Japanese investment in the EC.Journal of Common Market Studies, 3 (2), 175-193. H. The hot new seal of quality. (1992, September-October). The amount of time required to evaluate acompany's quality system depends on such factor as the size of the facilityfor which ISO 9 certification is sought, the number of employees, andthe production facilities' readiness for assessment (Zuckerman, 1996). The effectiveness of the changedepends on the degree to which functional logic focused on single operatingphase is addressed. Certification must bemade by an independent registrar who evaluates a company's processes withinthe context of quality standards established by the International Standardsorganization (Solomon, 1993). (199 , July-August). Rather than focusing on supporting a singlefunctional department or specializing in a single technology or platform,these centers now do reengineering on a project-by-project basis. It is not, and BPRrequires companies to "start from scratch. companyto win back market share from the Japanese without government intervention"(Anfuso, 1994, p. 31 5 - INTERNATIONAL STANDARDS: ISO 9 ......... Westbrook, R., & Williamson, P. Organization theory and design. The manager's guide to ISO 9 . Mass Customization and Globalization The emergence of the mass customization concept stems from thedynamism of the global market place. 5. With trade being supplanted by foreign direct investment asthe primary route to globalization, countries that accept transnationalfirms will "reap the benefits of increased investment, jobs, growth, andthe higher standards of living for consumers" (Sheridan, 1996, p. Integrated Manufacturing Systems, 2(1), 23-29. If a firm is a vendor in a distribution chainwith a large-scale retailer, the perception is likely that the quickresponse system concept has put the vending firm in bed with the devil-itsa bad situation to be in and a worse situation to leave. Some early reengineering projects lostmomentum and fell as much as 5 % short of their objectives. Motivating people by communicating the value of the target. Anfuso, D. As a general guide,management can either start with the largest unit value items and workdown, or group items by purchase markets according to source or usagerelationship. Other estimatesof ISO 9 registration costs, however, range from US$5 , toUS$5 , . 85-112). 3. Thestrategic-business-development loop is the time required to develop a newstrategy, make the decision to adopt it, and then implement the strategy(Northey & Southway, 1993). When "just in time" just isn't enough.Nation's Business, 8 (11), 3 -31. 3 ). Sanders, M. A case study of processimprovement. 19): 1. 31). "High-tech firms, in which intangibleassets are fundamental, are favored in this process as transfer costs arevery low. Approaches to cycle time reduction are numerous (Andel, 1994). Successful companies in such an environment, therefore, will bethose that both build and dominate these new markets that will be createdin "new and largely uncontested competitive space" (Hamel & Prahad, 1991,p. Thedistribution loop is the time from finished production to shipment to thecustomer from the distribution warehouse. Before 198 , high order backlogs in this loop created asense of complacency. 25). Obtaining ISO 9 certification is considered to be essential if acompany desires to market products within the European Community. Total quality in higher education.Management Services, 37, 1 -15. R. 114). 12). The three primary certification standards are structured as follows(Ferguson, 1994): 1. The system is not aquality check within the context of "classical standards" employed in otherquality assurance systems (Farahmand, Becerra, & Greene, 1994, p. 11). ISO 1 11 defines the requirements that must be applied byISO 9 quality system auditors when certified companies are monitored.ISO 9 4 provides guidelines for the application of the various elements ofa quality management system. 176). (1998, 15 January). Inventory management is concernedwith the planning, organization, and control of goods inventory, goodsproduction, goods stocking, and goods distribution. Integrate logistics operations to execute purchasingoperations effectively. The coordination of decentralized units is fundamental in obtainingcompetitive advantages. 33 The ISO 9 System Structure ............. Problems With Mass Customization While mass customization is quite likely the wave of the future forfirms that market products globally, problems remain associated with thepursuit of such a strategy. The issue, however, "is not how many hands the ordergoes through, but what essential role these hands play in the process andhow long the process takes. 24). The increasing complexity of globalbusiness operations requires the expanded use of cross-functional teams ofvarious specialists in the analytical and decision-making processes.Procurement typically is involved in a number of these integrated efforts.The adoption of increased integration also applies within the procurementarea, involving the development, implementation, evaluation, and control ofprocurement strategies (Rajagopal & Bernard, 1993). 8. Long-term contracting policies. C. E. Thus, cycle time reduction is not an isolated activitywithin an organization. 2. Supplier development policies. The establishment of cross-functionalrelations, with top management involvement, is essential to achieve acoordinated team-based effort. Although the speed of globalization through Europe, NorthAmerica, and Japan had increased by the first-half of the 2 th century, itwas still limited almost entirely to trade in manufactured goods because of(1) the differences in the way people lived in different parts of the worldand because of (2) the relative economic unimportance of trade in services. "In each company, the mixture is a littledifferent. Management Functions In global industries competitive advantages derive in large part fromthe integration and coordination on an international scale of the variousactivities of the value chain, while in the domestic markets thecompetitive advantages are specific to each country and different localstrategies. The company went through a leveraged buyout in 1988 as analternative to a hostile takeover. If themanual does not meet all of the requirements, it is returned to the companyto be rewritten and implemented. Zuckerman, A. (1993, July-August). Amstan implemented quality management outof necessity. (1997). 4 Management Functions ...................... This dictum becomes even more critical when a mass customization strategyis to be implemented. Identify the Company's Bargaining Strengths and the Strengthsof Critical Suppliers. Academyof Management Journal, 38(1), 85-112. Physical and information processes must be andintegrated (Mitchell, 1995). As productlife cycles continue to decrease, "the key to success will be to integrate(1) new-product strategies, (2) new-product research, (3) productdevelopment, and (4) launch activities into one effective short-cyclecapability that can respond consistently to ever-increasing market demands"(Northey & Southway, 1993, p. Mass customization strategies are highlydependent upon production, inventory, and distribution systems, in additionto sophisticated information systems. American Standard has 78 plants worldwide, and "at least 63 of thoseplants have at least one demand-flow line in operation" (Barrier, 1992, p.31). K. Convenience of Use of Mass Customization The implementation of a mass customization strategy requires areorientation of thinking within a firm (Kay, 1993). Both the production of products desired by customers and the deliveryof those products to retail establishments convenient to consumers isfacilitated by quick response systems. Since 199 , AmericanStandard (Amstan) has been converting all of its operations to "demand-flow" manufacturing (Barrier, 1992, p. (1996, Fall). The roles and tasks of management also will change when a companyoperates in a global environment. With respect to design and development, it is important to develop andimplement policies of product standardization to make it possible toincrease the unit production volumes (DeToni & Zipponi, 1991). In the United States,the ISO 9 board operates a joint system with the American NationalStandards Institute with no government supervision (Zuckerman, 1994a). D., & Speh, T. The identification of purchasingobjectives as a subset of corporate objectives-if undertaken jointly withthe determination of departmental objectives for finance, marketing, andproduction-will assist in the formulation of clear strategies that shouldbe both practicable and acceptable to the company as a whole. The strategic benefits oflogistic alliances. Manufacturing: The global economicengine. A reordering ofthinking is never an easy task. 18). Certification requires that the registrar conduct a focused "mini-review" of a company's quality plan every six months and a full-blownreassessment every three years (Zuckerman, 1996, p. ISO 9 Certification Procedures The numbers of failed attempts to obtain ISO 9 certification,referred to as registration, far exceeds the number of success storiesbecause of the lack of experience by companies in the pursuit of qualitywithin the context of the assumptions underlying the ISO 9 system(Zuckerman, 1996). 11). Expanding demand for cycle time reduction.Transportation and Distribution, 35(1 ), 95-1 2. (4th ed.). 7. 31). Journal of International Business Studies,26(4), 461-49 . European Management Journal, 11, 38. Make or buy investigations. Decision-makingauthority tends to be decentralized. Thus, in the "real world",strategic planning will often precede strategy development, because of thecyclical character of the strategic process. Acrossthe Board, 31, 51-52. The optional pre-assessment visit canhelp a company meet the requirements the first time (Zuckerman, 1996). Further, they were required to work with newprocess owners rather than with the department heads with whom they usuallyworked. 1 3 - CYCLE TIME REDUCTION AND GLOBAL PROCUREMENT .................. 4. The hierarchy of authority tends to be unclear. Within the context ofthe evolving global perspective, both organizational and strategy changesare required for the adaptation of multinational corporation to thechanging global environment. It's also the ability to create applications in an entirely newway-one that's in sync with the emerging new business process" (Moad, 1993,p. Total business-cycle time within an organization includes any or allof the following sub-cycles or loops. The most effective procurement system for aglobally-operating company is not necessarily one that provides eithermaximum efficiency or least total cost, "but rather one that fits the needsof the business and strives for consistency between its capabilities andthe competitive advantage being sought" (Rajagopal & Bernard, 1993, p. 57). (1995, January). When the new type of thinking demandedchanges and environment from stable to dynamic (some say chaotic) toaccommodate ever changing customer demands, problems tend to be magnified(Pine, Victor, & Boynton, 1993). "Not only were the slowercompanies struggling to compete, but they were faced with margin problemscaused by the higher costs of inventory and waste in the structure"(Northey & Southway, 1993, p. This can delay arrival of the information to themanufacturing process for several days" (Northey & Southway, 1993, p. 31). J., Mass customization: The new frontier in businesscompetition. Integrate information with identified tasks. Once the quality assurance manual has been accepted bythe registrar, an audit team from the registrar organization visits theapplicant company to verify that the procedures documented in the qualityassurance manual are being followed (Ferguson, 1994). Strategic procurementand competitive advantage. 61). 31). Knorr, R. Such, however, is just not the case. The procedures outlined in the manual need to be adhered toin the company's operations. Rondinelli, D. 61).For the past 16 years, the partnership has accomplished significant goalsat Xerox plants. L. Purchasing, 124(1), 78-82. 3. Three types of transfer class can be recognized: transfer of plants andresources, transfer of knowledge and ability, and transfer of tasks andresponsibilities. Included in a firm's external coalition are (1)owners, (2) suppliers, (3) unions, and (4) the general public. An integrated supply chain and value chain is aconnected series of organizations, resources, and activities involved inthe creation and delivery of value, in the form of both finished productsand services, to end customers (Monczka, & Morgan, 1998). Integrated strategy: Market and nonmarketcomponents. What will happen andwhat you should know. (1994a, October). These changes includedimplementing such initiatives as (1) increased teamwork, (2) more flexiblework arrangements, and (3) greater employee involvement. Since 1982, "Xerox has lowered production costs3 %, has cut product-development cycle time in half and has increasedproduct quality by more than 1 times. 61). 6. Sales departments responded to such competition by: (1) attempting topersuade the manufacturing function to commit to unrealistic deliverytimes, and as a result, sales departments soon discovered that they wereconstantly having to break promises to customers; (2) increasing factoryorders for finished goods and distribution inventory, an action that placedeven greater pressure on the manufacturing function. L. Inrelation to production, the generation of economies of scale can berealized either through (1) the concentration of all production activitiesor through (2) the construction of a number of plants according to theneeds of specialization. In the distribution context the regulation of control overcommunication technologies, together with deregulation in transport, favorsthe creation of alliances. Modern information and communication systemsallow greater integration among phases of the operation value chain, andmake decentralized units efficient" (Bowersox, 199 , p. Hilsdale, Illinois: The Dryden Press. Identify Objectives. In such an environment, continuousimprovement-the goal of all TQM programs-becomes a necessity, and then ahabit" (Barrier, 1992, p. J. The reason forthis situation is that organizational members responsible for the loop "donot fully understand the high financial returns to be gained from improvingthe loop's cycle time" (Northey & Southway, 1993, p. The transfer of experience can beconsidered as a form of coordination; the ability to capitalize andtransfer experience among the various units represents an importantadvantage for global companies in their competition with national firms.The transfer of management and technological experience is often recurrent. Other methods of classifying materials include: (a) ABCanalysis; (b) the use of strategic, tactical, and operational impactanalysis; and (c) the use of strategic, bottleneck, leverage, and non-critical classifications. By monitoring thesupply environment, procurement management should be able to identifyopportunities and threats as they develop. For product design and development-both of whichare linked to research and develop
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